In recent years, economic interest groups with vast financial
resources have used the initiative process with increasing
frequency. Such
groups often spend millions of dollars to promote their political causes, taking
their cases directly to voters. These expensive, high profile campaigns have
led many observers to conclude that by spending vast sums, narrow, wealthy
economic interest groups are able to use the initiative process to pass laws
at the expense of broader citizen interests. But can this point be proven? In
short, no.

There is no doubt that individuals, industry sectors and
special interest groups with large sums of money are using the initiative
process to seek reforms they want – but this isn’t new. In the early days of the
initiative process, businesses with an interest in selling alcohol and other
spirits to the masses used the initiative process to try and overturn
prohibition laws – but they were rarely successful. In the 1920s and 30s, the
chiropractic industry used the initiative process, with varying degrees of
success, to get states to allow them to practice. In the 1980s and 90s,
denturists (the people who make dentures, etc) used the initiative process to
try and get state laws changed so that they, in addition to dentists, could be
licensed to make and sell dentures to the public. They felt that dentists had a
monopoly and so they tried to stop it – but they were only moderately
successful. Since 1912, gambling and lottery interests have used the initiative
process to expand their industry. However, after spending tens of millions of
dollars over a 90-year period, the industry has managed to passless than 25% of the initiatives they attempted. This is why the industry has
chosen not to pursue initiatives to expand their interests. They realize that
money alone will not pass an initiative.

In the last decade alone, numerous wealthy individuals have
tried to enact reform through the initiative process only to lose after spending
millions of dollars. George Soros, Gene Sperling and Peter Lewis spent millions
of dollars in 2000 to try and get a drug policy reform initiative passed in
Massachusetts only to be defeated. Dick DeVos (the founder of Amway), along with
several other wealthy individuals spent almost $30 million dollars in the 2000
election cycle to try and get school choice initiatives adopted – they too were
left empty handed on election night. In yet another example, millionaire Ron
Unz, the successful architect of the California and Arizona initiatives to
require that schools teach in English only (with some exceptions), saw his
campaign finance reform initiative handily defeated in California in 2000 –
after spending a substantial amount of his own money. Many more examples can be
given, but in short, just because you have money doesn’t mean you can buy a law
at the ballot box. But let’s turn from the anecdotes and look at
the academic research this area.

Professor Elisabeth Gerber of the University of
Michigan, a leading expert in the study of the
initiative process, wrote a book on the role and influence of money in the
initiative process, The Populist Paradox (Princeton
University Press, 1999). In the book, she analyzed surveys of interest group activities and
motivations, as well as campaign finance records from 168 different direct
legislation campaigns in eight states. Her research found that "…economic
interest groups are severely limited in their ability to pass new laws by
initiative. Simply put, money is necessary but not sufficient for success at the
ballot box. By contrast, research found that citizen groups with broad-based
support could much more effectively use direct legislation to pass new laws.
When they are able to mobilize sufficient financial resources to get out their
message, citizen groups are much more successful at the ballot box, even when
economic interest groups greatly outspend them."

Political scientists Todd Donovan,
Shaun Bowler, David McCuan, and Ken Fernandez (in a chapter in Citizens as
Legislators (Ohio State University Press, 1998)) found that while 40% of ALL
initiatives on the Californian ballot from 1986-1996 passed, only 14% of
initiatives pushed by special interests passed. They concluded, "[o]ur data
reveals that these are indeed the hardest initiatives to market in California,
and that money spent by proponents in this arena is largely wasted."

This is not to say, however, that wealthy economic interest
groups have no influence on initiatives appearing on the ballot. They have been
very successful in blocking initiatives they do not like. Not because they are
buying a "no" vote, but because voters are 1) predisposed to vote against any
new law – regardless of if it is proposed by the people or the state legislature
and 2) are more likely to vote no and maintain the status quo when confronted
with a new law that they are uncertain about. This is supported by the fact that
only 41% of all the statewide initiatives to appear on the ballot have been
approved by the citizens.

Regardless of the fact that research shows that money can’t
buy a new law at the ballot box, there have been numerous attempts at regulating
the amount of money spent on ballot measure campaigns. In most cases, the
proposed laws have attempted to limit the amount of money corporations could
spend in either support or opposition of ballot measures. However, state and
federal courts, including the U.S. Supreme Court in 1977, have consistently
ruled that states cannot limit the amount of money in ballot measure campaigns.
Their basic logic has been that you can’t corrupt a piece of paper (the ballot
measure) and therefore there is no need in limiting the amount of money spent on
these campaigns. This is where they apply a different standard in those cases
pertaining to contributions to candidate campaigns – the courts have upheld
contribution limits to candidates because of the possibility of corruption.
In short, any attempt to regulate the amount of money in ballot measure
campaigns would be viewed as unconstitutional given the current case law.

There is no doubt that there will continue to be large sums
of money associated with initiative campaigns. But it is important to understand
why. The main reason is the growing regulation of the initiative process by
state legislators. They have been swayed by the rhetoric that money has
corrupted the initiative process – even though there is no academic research to
support this viewpoint. Their new regulations are the cause for the growing
amount of money in initiative campaigns. More regulation just means that
initiative proponents will just spend more money to overcome these hurdles. The
loser in this scenario is the average citizen. They do not have the resources to
overcome these hurdles and therefore are locked out of the process. If
legislators are concerned about wealthy individuals and special interest being
the only ones using the process, then they should make the process more
accessible to those individuals without access to large sums of money.

For the most recent evidence on the effect of
spending in ballot proposition campaigns, see Thomas Stratmann's article, "The
Effectiveness of Money in Ballot Measure Campaigns," and commentary from other
experts, in the direct democracy symposium of the Southern California Law
Review (May 2005). See also the survey by Arthur Lupia and John G.
Matsusaka, "Direct Democracy: New Approaches to Old Questions," in the Annual
Review of Political Science (2004).